Thread by @patrick_novum

What if $BUSD as a security was a red herring all along?

Stay with me for a minute.

Looking at the case law, unless there are facts we are unaware of, it would be very challenging and nothing short of legal gymnastics to even attempt to argue $BUSD on Paxos is a security.

The caselaw can be found here. Everyone is looking at the Howey Test, but the real meat of the matter is likely to be covered by a different case Reves Et Al. v. Ernst & Young found here:

scholar.google.com.sg/scholar_case?c…

But bear in mind, a Wells notice is merely a formal letter informing the recipient of an intention to litigate and providing an opportunity for the respondent to provide cause as to why the @SECGov should not proceed.

@NYDFS gets wind of the @SECGov looking to litigate @PaxosGlobal and immediately recognizes that it's the @binance-branded $BUSD product on #Paxos that's problematic - instructs Paxos to no longer mint the stuff.

That means only one thing, $BUSD is literally a reverse Hotel California, you can't check-in anytime you like, you can only leave.

$BUSD market cap can only go one way - zero.

Because @binance took the decision to convert all $USDT, $USDC and all other #stablecoin balances automatically to $BUSD (and to be fair, there was an opt-out option), the bulk of trading pairs on #Binance are tied to $BUSD.

binance.com/en/support/ann…

Which would lead to a predictable fallout, $BUSD leaves @binance and with it, trading volume, which would necessarily affect $BNB, which is what's led to the recent sharp fall in $BNB.

Customers cash out their $BUSD and sell $BNB leading to a self-fulfilling death spiral.

Users lose confidence in $BUSD and because $BUSD flows are larger than other flows on #Binance, this undermines Binance as an exchange, which undermines confidence in $BNB.

The US has already cut #Binance's banking facilities by forcing $SI and $SBNY to sever ties, same in Europe and other jurisdictions as well.

Binance can't get access to $USD to keep churning its exchange, now it can't get access to USD via $BUSD as well.

Even without a single affidavit being filed, the @SECGov may have already been able to accomplish its mission of knee-capping @binance with nothing more than a Wells notice.

Was that the goal to begin with?